Jim Farley, a metro Detroit native and grandson of a Lincoln Mercury dealer in Grosse Pointe, MI, remembers calling home after completing his MBA from UCLA in 1990 and telling his family he landed a job at Toyota Motor Sales U.S.A. Inc.
“There was a long pause on the other end of the line,” he says.
Today, Farley, 44, is vice president of Scion, Toyota's year-old, 3-car offshoot brand aimed at the coveted youth market. He was back home in metro Detroit recently to tout the latest in the lineup, the tC coupe.
“This is one of the most nervous days of my career,” he says. “Growing up in Detroit, I dreamed of walking into a design dome and saying, ‘Build that.’ And tC is that car of my life.”
It didn't take long to get the job done. The tC's product development is the fastest in Toyota history. A year ago, the car existed only as a clay model. The real thing goes on sale in July at Scion showrooms that are at about 800 Toyota dealerships.
The Scion sales areas are specially designed 400-sq.-ft. “pods” that contain 50-in. plasma screens, self-service Internet kiosks with printer stands and lots of accessories prominently displayed.
Stepping inside a Scion sales area, shoppers encounter a different style of automotive retailing, one geared to the tastes, lifestyles and demands of 20- and 30-something customers.
“We need to walk the walk at the retail dealership level,” says Farley.
Toyota dealers who take on the Scion brand sign a “covenant” that they will do business in a prescribed way. That includes no price negotiations. “Dealers can set their own prices, but it has to be the same for all,” says Farley.
The covenant also calls for staffers to be specially and extensively trained in selling to young customers who overall hate hard sells, are “incredibly suspicious” car buyers and want to get in and out, says Farley.
“Customers really appreciate the 1-price policy and the Scion method of selling because it is fair, transparent and, most of all, quick,” he says.
Catering to that market represents a big change for some Toyota dealers, who also must invest $150,000 towards Scion sales training and construction costs.
“Some dealers have told us, ‘You know what, I don't want to do that,’” says Farley. “We'll never have 100% of Toyota dealers selling Scions.”
About 66% do, and 93% of Scion customers say they would recommend their dealer to a friend. “We're seeing the same level of customer advocacy towards Scion dealers as we're seeing towards Lexus dealers,” says Farley.
Scion began selling cars in California last June, then the Southeast in February and the rest of the country last month.
In its first 12 months, the brand has delivered 33,000 units, 23,000 this year. About 80% of customers are new to Toyota, half under age 35 and 65% male buyers in a small-car segment that in general consists of 65% female buyers.
“Historically Toyota has had a difficult time attracting young men to our lineup,” says Farley.
He hopes to sell 75,000 Scions this year and 100,000 in 2005. The sales mix is expected to be 40% tC with a base MSRP of $16,465 (including freight), 40% xB with a base of $14,000 and 20% xA with a base of $13,000.
Scion dealers have been installing an average of $1,200 in accessories in the first two models. Farley hopes that will hit $1,500 with the tC.
Tony Acosta, general sales manager at King Scion in Deerfield Beach, FL, says he's sold Scions to several young people but also to “the typical Toyota customer.”
He explains: “A lot of middle-aged people sit in the car, like it and buy it.”
He says the boxy xB sells well, but xA sales are slow. Farley says the xB outsells the xA two to one nationwide, “which surprised us.”
Acosta says, “The no-negotiation policy makes for an easier, smoother deal that customers seem to like. We're also doing a lot of accessorizing.”
Scion uses non-traditional marketing, with an emphasis on websites and a presence at youth-oriented urban to-dos, such as break-dance tours and graffiti art exhibits.
“We deliberately hit underground events,” says Farley. “We do 50 nightclub events a month.”
How did he, as a guy in his 40s, become so plugged into today's youth culture?
“They gave me this job.”